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What Is Digital Performance Marketing?

Joanne Arguelles
Written By
Joanne Arguelles
Published On
Jun 18, 2021
A woman holding a credit card, making an online purchase on a laptop

The best way to remember the gist of digital performance marketing is that it’s an online advertising strategy wherein you pay based on the performance of marketing efforts. In that sense, performance marketing is highly focused on results.  

This blog will delve more into the nuances and scope of performance marketing, but before we proceed, it is important to understand that performance marketing falls within the broad umbrella of digital marketing. 

Digital marketing has various pillars including digital advertising, social media marketing, influencer marketing, and more. These pillars never operate in a silo but typically synergize together, and performance marketing can be implemented through all the examples of the digital marketing pillars we mentioned above. 

Ready to learn more about performance marketing? Great! Many businesses love performance marketing and so do we – that’s why we’ve put together this comprehensive guide to help you get a better understanding of:

  1. What digital performance marketing is;
  2. Where you can implement performance marketing; and
  3. The benefits of performance marketing.

Let’s get started!

A female entrepreneur uses a laptop

What is Digital Performance Marketing?

Digital performance marketing is an online marketing strategy that is centred on results. Businesses who opt to do performance marketing, on any channel where it is available, will only pay based on how the online ad performs. So the key focus here is the pricing model of the ads. 

However, digital performance marketing is not confined to online ads alone.There are also influencers who take on a pricing model that aligns with how performance marketing works (which we will talk about in another section). 

The Main Benefits of Performance Marketing 

Money Well Spent

One of the most prevalent problems with traditional marketing, wherein advertising is paid for up front, is that it can be unclear how marketing expenses correlate to ROI. However, if your business leverages performance marketing, you can choose to pay only when your ad or marketing effort generates actions that lead to ROI for your business. 

For example, you can opt to only pay for every completed sale or booking. Hence, every penny you spend on performance marketing is well worth it. This is why small businesses and large corporations alike use performance marketing to expand their reach, generate more revenue, and ultimately grow their business. 

Free Brand Exposure

When utilizing performance marketing, it may be that some potential customers do not click on your ad or go into your sales funnel from that ad. If your chosen pricing model is cost-per-click or cost-per-sale (some of the most common pricing models used in performance marketing), then it means you don’t need to pay for the times your ad was seen but no such actions were taken. In short, you get the bonus of free brand exposure. 

Versatility

A digital performance marketing strategy can be implemented on a number of channels including social media, display ads, and more. Furthermore, there are various marketing goals that you can accomplish with digital performance marketing such as driving more traffic to your website, getting more sign ups to your email list, generating more sales, and more!

Pricing Models Associated with Performance Marketing

Performance marketing is centred on actions. Hence, the pricing models for marketing efforts under performance marketing are as follows:

1. Cost-Per-Click (CPC)

As the name “cost-per-click” suggests, businesses pay based on how many clicks their online ad has gotten. This is typically selected if the intent is to drive traffic to a site or a landing page. Though an action is associated with this pricing model, it is still somewhat less direct if your intent is to increase sales, gain new leads, boost subscriptions, and so on. For these latter examples, there are other more fitting performance marketing pricing models. 

2. Cost-Per-Lead (CPL)

That’s right. Performance marketing allows you to have ads that you only need to pay for if you get a lead from them. Typically, cost-per-lead is chosen when the desired action involves leaving contact details, signing up for a webinar, subscribing to an email newsletter, and so on. Choosing a cost-per-lead pricing model eliminates the chances of paying for accidental clicks. 

3. Cost-Per-Action (CPA)

Choosing the cost-per-action pricing model allows advertisers to pay only for specific actions such as making a purchase, signing up for a service, and so on. Typically cost-per-action is linked to some form of transaction. The main advantage of choosing cost-per-action is that every single ad expense can be linked to revenue. It also eliminates any risk of paying for bad leads. 

A woman online shopping on her phone

Channels for Implementing Digital Performance Marketing

1. Display Ads

Display ads can be considered one of the first modalities of digital marketing. Though digital advertising has been around for a while, numerous businesses are still finding success with using display ads in their digital performance marketing campaigns through interactive ad elements, interesting graphics, and/or compelling copy or video.  

Display advertising has become somewhat synonymous with Google Ads since this is the most popular online advertising platform. It’s understandable because the Google Display Network (GDN) encompasses more than two million websites, apps, and videos where display ads can be served. 

2. Search Engine Ads

In this modern day and age, many people turn to search engines like Google for answers. This is why search engine marketing is powerful – it allows businesses to reach their customers at that critical point when their customers need them. Typically, a CPC model is used for search engine marketing.  

3. Social Media Ads

On many social media platforms, achieving massive reach through organic posts is becoming more and more challenging. This is why making use of performance marketing is more necessary than ever. 

For performance marketers, social media is an exciting tool because there are numerous options on how to customize ads. Typically, performance marketing on social media can help in increasing website traffic, generating leads, and increasing conversion. There are also various pricing models to choose from.

The key challenge for marketers, however, is finding the right platform(s) that targets their desired audience. Determining the most fitting social media platform(s) is the first crucial step before doing performance marketing on social media.    

4. Affiliate Marketing

It may seem that the terms affiliate marketing and performance marketing are interchangeable, but affiliate marketing is only a subset of performance-based marketing. 

In affiliate marketing, an advertiser pays an internet publisher (the affiliate) to promote their products/services. Then, each lead or sale from the affiliate is tracked and a commission is paid to the affiliate for every lead or sale.  

5. Influencer Marketing

Influencer marketing has been increasingly showing incredible results year-over-year. Around 67% of marketers believe that influencer marketing helps them to reach a more targeted, yet vast audience. Furthermore, influencer marketing is known to have an ROI that’s 11x higher than that of traditional marketing methods. 

Similar to how affiliate marketing works, businesses can also use performance-based influencer marketing to drive maximum results while lowering the risk of wasted budget when using pay-per-post or subscription pricing models. Currently, some (but not all) influencers offer performance marketing pricing models like CPC, CPS, and CPA.  

Performance Marketing for Your Business

Get Started on the Channel(s) of Your Choice

As we’ve covered, there are numerous channels that you can use for performance marketing. However, before everything else, it’s vital to get a clear understanding of what you want performance marketing to achieve for your business. Along with these goals, consider your target audience. Looking into the technological inclinations of your target demographics can be helpful, along with studying the type of messaging that works best with them. What channels are best used to connect with them?

After determining your preferred channels, learn more about the options for performance marketing that are available for you. Different ads on different platforms would have their own formats and requirements for layout, copy, and graphics. Furthermore, budget scopes would also differ for each channel. Looking into average costs for each channel would be a great way to get an idea of such costs. 

Take Your Performance Marketing to the Next Level

Though performance marketing on various channels has been a reliable source of success for various businesses, it usually takes fine-tuning through trial and error over time. A series of split tests and optimizations would usually take weeks or many months before you can get solid, actionable data to fuel your insights. 

So for you to get quick success with performance marketing, we recommend putting your trust in a team of experienced marketing experts who can take care of everything from strategy to designing graphics, all the way through to execution, and post-ad-campaign data analytics.  
If you would like to learn more about what we can do for you, feel free to contact us!

ABOUT THE AUTHOR

  • Joanne Arguelles is a Content Writer at The Influence Agency who specializes in long-form content and loves all things digital. When not wearing the writing hat, she is a devoted learner in diverse areas of interest like personal development, ocean conservation, and hula-hooping.

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ABOUT THE AUTHOR

  • Joanne Arguelles is a Content Writer at The Influence Agency who specializes in long-form content and loves all things digital. When not wearing the writing hat, she is a devoted learner in diverse areas of interest like personal development, ocean conservation, and hula-hooping.



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